Posts Tagged ‘bootstrap your business to success’
Monday, August 29th, 2011
When considering if factoring is right for your business, a question that often arises is if there is a specific criteria for determining invoices that are eligible for purchase from the factoring provider. That is a pretty easy question to answer… common sense is a good guide for this one. If the goods were delivered to/received by your customer and/or the services were performed, then those invoices are eligible for purchase.
There is one additional proviso and that is simply, your customers must be creditworthy. There is some due diligence on our part in determining this last stipulation, but presumably, you would not be doing business with customers that could not pay you.
Tags: alternate financial products, bootstrap your business to success, cash is king, debt-free, Factoring, Grow your business, Older Invoices - Factoring Can Help!!, small business, Success in small business, without debt
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Friday, August 26th, 2011
Since this is a blog dedicated to factoring, I thought it might be helpful if I tackled some of the frequently asked questions that we encounter in our day to day business. I believe the basis of a lot of questions that arise are due in large part to the fact that factoring is a little understood business financial tool. Probably the most popular question has to do with whether or not factoring is a good fit for a client’s business.
Let me first reassure you that factoring is an excellent fit for most businesses. I don’t know of a business in operation that does not have a need for working capital. The problems arise when a business does not have working relationship with a bank… or for any number of reasons, cannot qualify for a bank loan or line of credit. It is a fact that it is easiest to get credit when you don’t need it. First let me set the record straight, in the factoring relationship, you are not a borrower, and we are not a lender. We purchase your accounts receivables, that is called factoring. We purchase receivables for goods delivered or services rendered.
Once our business relationship is established you, our client, simply deliver your invoices to us. We offer as much or as little support in the billing process as you are in need of. Normally, you will have your advance within 24 hours. Then, once your customer remits payment we pay you the received amount less your advance and our fee. It is a very simple process and one that provides the working capital necessary to grow your business.
Please feel free to comment or ask questions. We are eager to assist you with your business financial needs.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Grow your business, Older Invoices - Factoring Can Help!!, Success in small business, without debt
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Monday, August 15th, 2011
As you recall we talked about staying on top of your accounts receivable. It is just as important to maintain control of your debt.
Many businesses fail because they take on a huge burden of debt in the early days of their start-up. Once that tone is set, they often continue to struggle to make ends meet.
Keep everything as lean as possible in the early days of your business. Keep an eye on unnecessary costs and ensure that you are moving money back into your business, rather than racking up debts. Many business advisers suggest start-ups look to family and friends for start-up capital, or resources to keep you afloat during lean times. If these resources are not available to you, then you may consider bootstrapping your business. Our firm also offers financial alternatives and we would be happy to visit with you about your options.
Tags: alternate financial products, bootstrap your business to success, cash is king, Grow your business, Older Invoices - Factoring Can Help!!, Success in small business
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Thursday, July 7th, 2011
As you know, it is our passion to help the business owner grow their business to its greatest potential. Whether partnering with you for your business financial needs or just serving up information, we want to help you realize your business ownership dreams. We try to keep you up on the latest tools to assist you in your endeavors. To that end, check out the IRS site for tools to help with your small business. Whether just getting started on feeling the twinges of growth the tools on this site are very helpful.
http://www.irs.gov/businesses/small/index.html
Tags: alternate financial products, bootstrap your business to success, Grow your business, small business, Success in small business
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Thursday, June 30th, 2011
We all know that times are tough, business is in a terrible slump. As you know we specialize in tools to help the small business owner get the alternate financing they need.
Here is an interesting article that supports the need for alternate financial options for the small business owner.
Smaller Businesses Seeking Loans Still Come Up Empty.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Grow your business, small business, Success in small business, without debt
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Tuesday, June 7th, 2011
In a recent article that appeared in the June, 2011, Costco Connection, Don Sadler provided some terrific information on the factoring industry. He cited a Washington Monthly article in which Jeffrey Leonard, CEO of the Global Environment Fund, stated that, “Typically, small businesses lead the way out of recession…” Mr Leonard explained that the reason we are not seeing that this time is due to the fact that small businesses are experiencing cash flow problems.
“Many large companies today have simply announced that as a matter of policy they will be paying their bills late – sometimes as much as four months late,” Leonard noted. This policy results in small businesses essentially making “free loans” to their customers – rendering their working capital unavailable.
Mr. Sadler cited a couple of options that are available to the small business owner: optimizing cash flow and factoring. Sadler quoted Tracy Eden, national marketing director for the Commercial Finance Group, “Factoring is a creative financing solution for businesses that don’t qualify for traditional bank loans but need a financial boost to help manage their cash-flow cycle.”
Factoring allows businesses to sell their outstanding invoices to a finance company, known as the factor, at a discount. According to Ryan, “Instead of waiting up to 90 days or longer to get paid, the business receives most of the cash – typically 70 – 90 percent of the receivable – when the invoice is generated.” When the factor collects the invoice the small business will receive the balance, less the discount.
This scenario is a win – win situation in that the small business can maintain cash flow, allowing them to make payroll, purchase supplies, or whatever they need to focus their working capital on as well as keeping their customers happy and maintaining a positive relationship.
If you would like additional information you can contact our office to see how factoring might be a great option for you to keep your cash flowing during these unsettled economic times.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, Older Invoices - Factoring Can Help!!, small business, Success in small business, without debt
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Thursday, January 20th, 2011
As I have mentioned in past post CASH IS KING!! If you intend to drive your business to success you have to take charge of your cash flow and ensure that it is ‘flowing’. The issue of cash flow is a multi-faceted gem that needs to constantly be monitored and ‘polished’. You cannot realize business success without hopping in the driver’s seat and driving your cash flow. This is evidenced by the ever increasing number of business that are not thriving… and the number of “going out of business” notices that we are seeing. Yes, we are experiencing economic challenges in both the professional and personal sector, but we do not have to take a wait and see approach.
1. Get busy recognizing where your cash flow challenges are. Are you allowing those that buy your goods or services to adopt a slow pay policy? Whether it is a slow leak or a fast leak, slow payments are an increase in your cost of doing business. Put your customers on notice that they need to pay in a timely fashion. Whether you choose to adopt a policy where you require payment at time of providing goods/services or allow your customers to pay you within a certain time frame you need to maintain control of the process. I recommend the pay as you go option, but realize that may be something you will work with as your comfort level allows. Be aware that, if you allow customers to pay within a certain time frame it is essential that you don’t allow them to ‘forget’ about you. Follow up in the form of a statement – 15 to 30 days after payment was due. You might then try a follow up phone call or letter. It is a good idea to have a plan “B” in place, in the event the slow pay drags on beyond 60 or 90 days; either in-house collector or a collection agency. The phone calls don’t have to be threatening. We find that making calls as a courtesy, “We wanted to ensure you received the invoice and that there is not a problem with the services you received,” is often all it takes.
2. Funding – A revolving line of credit with your lender is a good tool to establish in your business arsenal. A revolving line of credit can open up funds to allow you to take advantage of cash payments to your vendors, when they offer specials, and a plethora of advantages to keeping “cash on hand”. In the event that a revolving line of credit is unavailable to you in your business (often the case with new startups or those that might be extended beyond what the lender feels is a good risk) there are some wonderful alternate funding options open. Factoring is a great option to the traditional lender and is a great way for a business to improve cash flow without incurring additional debt.
3. There is a lot to be said for the tried and true art of putting something away for a rainy day. We all know that in business, as in life, there are ebbs and flows. If you have a program set up with your lending institution where they take out a certain percentage of your deposits, off the top before they even hit your business account, you will find that it is easier to implement a savings program. If you can establish this practice in the good times, then when times are lean, you may have set aside enough to fall back on.
Please contact our office and we can discuss some of our alternate funding options to help improve your cash flow. Or you can email me directly at Kim@Funding4You.com.
Tags: alternate financial products, bootstrap your business to success, cash is king, cash on demand, debt-free, Factoring, Older Invoices - Factoring Can Help!!, success, sucess in small businesses, without debt
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Monday, January 17th, 2011
I recently read an article by Keith Mabe. The article was an excellent discussion of the recovery of our economy and cited some great information about whether we are actually headed to better times. Mr. Mabe cited comments made by Robert Pollin, an economic professor from the University of Massachusetts-Amherst. Dr Pollin pointed to the fact that an economic recovery can only occur if small businesses can be actively involved in the process. Pollin went on to state that such involvement by the small business sector can be difficult due to the problems inherent in obtaining funding through the regular crediting channels. Mr. Mabe discussed factoring and how it can be used to relieve the cash flow issues business owners deal with.
Mabe pointed out that: “It is critical that businesses acquire a funding source that is readily available and dependable. Factoring (also known as Accounts Receivable Financing) is an often overlooked choice for businesses trying to participate in the recovery. This form of financing is not widely known, but allows businesses to capitalize on the power of their outstanding invoices. Factoring can be a valuable mechanism to turn business invoices into immediate cash, enabling them to fund business operations.”
The biggest thing that I came away with, from this article, was that we need to be open to alternate ways of doing business. Whether, as a business owner, you need to address cash flow issues so that you can pay your employees in a timely fashion, or get early pay discounts from suppliers, funds that you can obtain without going into debt with a normal lender can benefit your business. By converting your receivables into cash you can regain control of your business and deal from a more financially savvy position. The business owner is left with the control of how quickly he/she wants to grow their business. Factoring can be used for a short term fix, or a long term cash flow tool.
As Mr. Mabe concluded: “Factoring has become an important small business financial tool in the midst of this uncertain economic environment, as it has proven to be a cost effective alternative for working capital to fuel business growth and to timely pay sensitive cash obligations.”
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, sucess in small businesses, without debt
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Friday, January 14th, 2011
As we discussed yesterday, it is imperative to identify challenges within your company, in order to establish some best practices for your business model. But, what do you do with those policies once you have identified them?
Execute:
If you simply take stock of the issues you will not see much of an improvement. While knowledge is power, you have to implement that knowledge into real action. Turn your ideas into policies, and formalize them. Make a big deal out of introducing them to your employees and explain the rationale behind them. Best practices are intended to improve your company’s financial bottom line. Ideally, this will translate into a positive outcome for everyone. During the meeting to discuss the new policies make certain to emphasize the constructive nature of the changes. You may also want to put the policies in writing and have them available at the meeting.
Here are some examples of best practices that other businesses have implemented.
Invoice for goods and/or services at the time they are provided.
Set a specific time interval to deal with collections, ideally once a week.
Estimate your income tax obligation monthly, not just quarterly. When payments come due, there won’t be any major surprises.
Provide cross training for employees where practical. That way you won’t have downtime if someone is ill or out for a period of time.
Utilize technology where you can (i.e. set us a merchant account to receive payments).
If possible, have employees who incur billable time use a timer. A few minutes lost here and there can add up, and this can be a big ‘leak’ that needs to be plugged.
Review your pricing structure. Ensure that you are building in enough to cover overhead and still realize enough profit to not only sustain but grow your business.
Run inventory reports regularly. This will allow you to keep close tabs on your inventory and not have any surprises. This may also allow you to shop for the items you need at a lower price rather than having to replace something last minute and potentially having to pay a premium.
This is not a difficult process. You simply need to utilize the publicized practices of the most successful businesses and adapt them to your business situation. Also keep in mind that you can network with other business owners that you know to see how they have approached implementing best practices. If cash flow is hampering some of your best practices, such as maintaining your inventory numbers, then please contact us for a solution.
Tags: alternate financial products, bootstrap your business to success, Factoring, Older Invoices - Factoring Can Help!!, small business, success, sucess in small businesses
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Thursday, January 13th, 2011
I recently read a terrific article in a newsletter that I think speaks volumes to the business owner; large or small. The article referred to Best Practices models that could be implemented at any stage of your business and would help the business realize some pretty significant improvements. At this time of year – when we are working on getting a fresh start – these suggestions can play a great role in a ‘jumping off point’ for that fresh start. This article caused me to consider how important best practices are to the health of a business and how many business owners are missing out because they simply may not know how to incorporate such policies into their particular business model.
There are three stages you need to address when you decide to apply best practices to your business model.
Identify:
It is imperative that you first identify the problems are you trying to solve. What are you pain points?
• Cash flow
• Collections
• Payroll
• Reduction in your customer base
• Timely payables
• Inventory
It might be helpful if you consult your employees about issues they see in the company. Employees can often see where the disconnect is and will appreciate you taking the time to assist with their pain points.
We at the Factoring Alliance can assist you with cash flow to help with a number of the above issues. From making your payroll on time, to cash flow to keep up with inventory needs we can partner with you to help you grow you business. Please feel free to contact us about our services and products or email Kim@Funding4You.com.
Tags: alternate financial products, bootstrap your business to success, cash is king, Factoring, small business, sucess in small businesses
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